Back
2017 MarsdenLR 126
COURT OF APPEAL PUTRAJAYA
NOR AZLINA ABDUL AZIZ – Appellant
Versus
EXPERT PROJECT MANAGEMENT SDN BHD – Respondent
[Civil Appeal No: W-02(NCVC)(W)-1941-11-2015]
The failure to fulfill conditions precedent in a contract results in automatic termination, necessitating adherence to contractual obligations without ambiguity.
Headnote:The appeal contests a High Court decision dismissing the appellant's claim and allowing the respondent's counterclaim with significant damages. The court evaluated the development agreement's terms, particularly around conditions precedent, ultimately determining that the contract's failure to meet these conditions resulted in automatic termination. The court framed the issue as whether the appellant's conduct constituted a unilateral termination of the contract and found that the appellant properly adhered to the conditions precedent as per Clause 5 of the Agreement.
Result: Appeal allowed; contract deemed automatically terminated.
| Table of Content |
|---|
| 1. the appeal addresses the high court's dismissal of the plaintiff's claim. (Para 1 , 2) |
| 2. relevant facts related to the agreement and construction obligations. (Para 3 , 4 , 5 , 6 , 7) |
| 3. noteworthy developments in the plaintiff's communication with the defendant. (Para 8 , 9 , 10 , 11 , 12 , 13) |
| 4. high court ruled the agreement was not automatically terminated despite delays. (Para 16 , 17 , 19) |
| 5. the high court's misapplication of contract law principles. (Para 18 , 23 , 25) |
| 6. court identified misdirection in the trial judge's understanding of the agreement. (Para 21 , 22 , 24) |
| 7. contract automatically terminated if conditions precedent not met within specified period. (Para 28 , 29) |
| 8. appeal allowed; court ruled contract terminated and ordered compliance with agreed terms. (Para 30) |
[1] This is an appeal against the decision of the High Court at Kuala Lumpur delivered on 30 October 2015 after a full trial. The High Court had dismissed the appellant's claim and allowed the respondent's counterclaim with special damages in the sum of RM1,194,257.02, general damages in the sum of RM2,000,000.00, refund of a deposit of RM200,000.00 and costs of RM30,000.00.
[2] This appeal was heard on 14 September 2016. After hearing the parties and taking into consideration the written submissions, we allowed the appeal and set aside the order of the High Court. Our reasons for doing so now follow. For convenience, the parties will be referred to as they were in the High Court.
Salient Facts
[3] The salient facts giving rise to the civil suit can be stated as follows. The plaintiff is the registered owner of all that land held under GM 4430, Lot No 13144, Tempat Perimbun, Mukim and District of Hulu Langat, State of Selangor ("the said land"). The defendant is a private limited company and its principal business is that of a housing developer
[4] The plaintiff and the defendant entered into a joint venture agreement known as the Heads of Agreement dated 11 September 2012 ("the Agreement"). The salient terms and conditions of the Agreement that concern the dispute in this appeal were as follows:-
(a) The defendant was to construct on the said land three (3) bungalows on the plaintiff's Lots, identified as Lots 1, 2 and 5 ("the plaintiff's Lots") and also a Shared Lot, that is, on Lot 3 ("the Shared Lot") within the stipulated period. The remaining 9 Lots are to be developed by the defendant and known as the company's Lots ("the defendant's Lots"). The defendant was to carry out the development of the said land comprising 13 bungalows with infrastructure at the cost and expense of the defendant.
(b) Clause 5 provided for the conditions precedent, that within one (1) year from date of the agreement (11 September 2012), known as the "conditional period" with 11 September 2013 being known as the "unconditional date", the defendant shall obtain all the approvals, consents, permits and licences required by the relevant authorities for development of the said land pertaining to the following:-
(i) Planning permission;
(ii) Building plan approval for the plaintiff's Lots;
(iii) Conversion of the land from agricultural land to residential land; and
(iv) Subdivision of the land.
(c) Clause 5 also provided that if the defendant fails to comply with the requirements mentioned above, the Agreement shall automatically be terminated and neither party shall have any claim against the other (save and except for any antecedent breach).
(d) Clause 6(i) provided that the plaintiff is entitled to a refundable deposit of RM200,000.00, which deposit shall be forfeited in the event of the defendant's default.
(e) Clause 7(i) provided that upon the fulfilment of the conditions precedent, the defendant shall immediately commence the earthworks and infrastructure works in respect of the land and complete all the same within 24 months after the unconditional date.
(f) Clause 7(ii) provided that within 24 months after the unconditional date, the defendant shall complete
